PhosAgro merge OJSC Ammophos Cherepovetsky Azot

PhosAgro to merge OJSC Ammophos and Cherepovetsky Azot

10:52 PM, 14th November 2011
PhosAgro to merge OJSC Ammophos and Cherepovetsky Azot

 

MOSCOW, RUSSIA: PhosAgro is planning to merge two of its subsidiaries, OJSC Ammophos and OJSC Cherepovetsky Azot. The planned transaction would create a new company that assumes all rights and obligations of the two subsidiaries. Shareholders of Ammophos and Cherepovetsky Azot would receive shares of the new company and the old companies would cease to exist as legal entities. The reorganisation is expected to complete in July-August 2012.

“By simplifying the structure of the company we hope to reduce administrative costs incurred by maintaining two separate legal entities. This should also simplify production process, as a significant portion of Cherepovetsky Azot's output is used within the group. Finally, we are confident that the merger will further increase transparency. Sometime in the future, we also plan to consider adding Agro-Cherepovets, another PhosAgro subsidiary, to the newly-created company,” said Maxim Volkov, CEO, PhosAgro.

PhosAgro believes that the merger may create synergies by: Reducing managerial and transaction costs, centralising accounting procedures, financial control and removing other duplicate administrative functions; Lowering borrowing and debt-servicing costs due to the increased size of the company; Creating a single system to manage rail, energy and transport infrastructure, inventory and material and technical resources, service shops and maintenance services; and reducing energy supply costs: excess energy generated at Ammophos through recaptured steam from sulphuric acid production that is currently sold to the regional grid will replace the electricity purchased at higher cost on the wholesale market by Cherepovetsky Azot.

(C) WOC News

 

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